Gold Slips A Little On Slightly Hawkish FOMC Statement
(Kitco News) - Gold prices are slightly lower in afternoon U.S. trading Wednesday, and lost mild earlier gains in the wake of today’s FOMC meeting statement that saw the Fed U.S. raise interest rates slightly. August Comex gold futures were last down $0.30 an ounce at $1,299.90. July Comex silver was last up $0.009 at $16.90 an ounce.
The Federal Reserve’s Open Market Committee (FOMC) meeting concluded Wednesday afternoon with the Fed raising U.S. interest rates by 0.25%, to a range of 1.75% to 2.0%. The rate hike was fully expected. The FOMC members also indicated the stronger U.S. economy now warrants a total of four interest rate increases this year. Many in the marketplace had reckoned the Fed would only make three rate increases in 2018. That element of the statement was just a bit of a surprise and deemed slightly hawkish. Fed Chair Jerome Powell is having a press conference following the meeting, and to begin soon. Traders will parse Powell’s comments for clues on the pace of future U.S. rate hikes.
The European Central Bank holds its monetary policy meeting on Thursday. No change is expected in ECB policy, but the central bank is still on a path of easy money that is keeping its interest rates very low, and diverging with those of the U.S. More weak economic data coming out of the EU today—industrial production that fell more than expected—is another clue the ECB has to keep its monetary policy very accommodative. By the end of the year the spread between key U.S. and Euro zone interest rates is expected to be around 3.0%.
The U.S. producer price index for May was released today and came in at up 0.5%. The number was forecast to come in at up 0.3% from April. The markets did not show a big reaction to the PPI report, but the data does show inflationary pressures are on the rise.
The key “outside markets” today find Nymex crude oil prices slightly lower and trading just above $66.00 a barrel. The International Energy Agency said world oil demand should remain strong in 2019, growing by 1.4 million barrels per day. Meantime, the U.S. dollar index is near steady early today.
Technically, gold price action has turned choppy and sideways recently. This has negated a price downtrend and suggests a near-term market bottom is in place. The gold bulls and bears are on a level overall near-term technical playing field. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at the May high of $1,332.40. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the May low of $1,286.80. First resistance is seen at this week’s high of $1,307.00 and then at the June high of $1,312.60. First support is seen at the June low of $1,293.10 and then at $1,286.80. Wyckoff's Market Rating: 5.0
Silver prices hit another six-week high above $17.00 today. The silver bulls have the overall near-term technical advantage. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at the April high of $17.425 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the May low of $16.07. First resistance is seen at today’s high of $17.025 and then at $17.11. Next support is seen at this week’s low of $16.77 and then at $16.645. Wyckoff's Market Rating: 6.0.
July N.Y. copper closed down 15 points at 324.80 cents today. Prices closed near mid-range on more mild profit taking after hitting a 4.5-month high late last week. The copper bulls still have the firm overall near-term technical advantage. A bull flag or bullish pennant pattern may be forming on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the December high of 334.20 cents. The next downside price objective for the bears is closing prices below solid technical support at this week’s low of 309.00 cents. First resistance is seen at 326.85 cents and then at 330.00 cents. First support is seen at today’s low of 322.40 cents and then at 320.00 cents. Wyckoff's Market Rating: 7.0.